Retirement Account Basics

Is it a good idea to keep multiple accounts from previous employers?

It is not unusual for an individual to acquire several retirement plan accounts over different phases of a career. When it comes to retirement accounts, simplicity is key. Having several plans may seem like a fail-safe in troubled times, but from a personal bookkeeping perspective, it will be easier to keep track of and maintain fewer accounts when retirement begins. Holding fewer accounts should also reduce account expenses paid over time.

If your current employer offers a plan with reasonable costs and diversified investment choices, consider rolling small accounts into your current plan (as long as your plan allows for incoming rollovers). If your employer does not offer reasonable options, such accounts can be moved into an IRA or Roth IRA.

Note: Roth 401(k) accounts are eligible for rollover distributions into Roth IRAs upon retirement or separation from employment. Traditional 401(k) accounts, on the other hand, can be rolled into regular IRAs.

Which one first? Saving for a child’s college education or retirement?
Saving for retirement before saving for a child’s education may seem surprising. However, it is a wise approach for securing the future for you and your family. One reason for prioritizing saving for retirement would be the financial stress potentially placed on a family if an individual reaches retirement age without enough saved to live independently.

While college loans are more difficult to obtain in today’s economy, it is easier for a student to obtain a loan to pay for education than for a retiree with fewer options for borrowing. Ideally, of course, something would be set aside for each goal.

Now and later: Good times to save for retirement
When you save for retirement, you are saving for the long run. Over time, you should expect cycles of volatility. But when it comes to retirement plans, time is the greatest asset. If you ignore market noise and stick to your existing plan, you give yourself a better chance of remaining on course to achieve your long-term financial goals.

This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Copyright © 2012, Buckingham Family of Financial Services.

 
 

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Heartland Wealth Advisors, L.L.C.
7015 College Boulevard, Suite 750
Overland Park, KS 66211
phone: 913.469.8228
fax: 913.469.8219
 
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